good morning, everyone. welcome to "squawk box" here on cnbc. i'm becky quickick along with andrew ross sorkin and brian sullivan who is in for joe kernen. good morning. >> good morning. >> "squawk box." give yourself a break, like you said, it's monday morning, it's been a long weekend. >> but a good weekend. i mean, you were here on friday night. >> i was here on friday night late. >> i spoke to you late on friday afternoon. >> i just slept here. i was here all weekend showering in the sink here at cnbc global hq. >> you know there is a shower upstairs. >> i found that out this morning, two days after the sink. >> welcome. we're glad to have you here this morning. we're going to check in with scott cohen in a moment. but first, we begin with the markets. this past week was the worst week we've seen yet for stocks. u.s. stocks are coming off again their worst week in five months.

the dow and the s&p each lost about 2%. but you can see the u.s. equity futures are indicated higher this morning. dow features up about 63 points above fair value. the s&p futures up by more than 657 points. and the nasdaq is up about 16.5 points. in asia overnight, stocks traded higher. the nikkei was up by 1.9%. the shanghai composite was up by about 1 is.5%. it did fall slightly from a three-week high that it hit on friday. the yen is once again within striking distance of the key 100 level against the dollar. it came ever so close. right now, it's at 99.78. it came as high at 99.88. traders are pointing to the weekend g-20 meeting in washington. the group's finance ministers did not directly criticize japan for pursuing an aggressive monetary policy. that decision gives the bank of japan the green light to go ahead with its currency depreciation plan. we're calling this a currency depreciation plan at this point. you watch the central banks around the globe and this has been pretty active.

but japan has been the most aggressive thanks to this point. >> some people call it manipulation, but -- >> some people call it economics, too. i know when there's a whole lot of something, the prices depreciate. >> at this point, it's sitting very close to 100. as for the situation in europe, stocks opening higher there. among is ropes is hope for political dead lock in italy. it's been sthaled the parties may be near a deal to form a government. >> back here in the u.s., earnings season set to shift into overdrive. about one-third of the dow and the s&p will report this week.

to date, a tad more than 20% of the s&p 500 have posted their results. of those, 67% of top expectations. however, only 43% have beaten revenue estimates. that's nearly 20% lower than the average. among today's headliners in certainings central is caterpillar. i think it's a fair way to say this, companies unfortunately are cutting their way to earnings success. >> apple reports after the close tomorrow. it's expected apple to report a nearly 8el% jump in revenue. that would be the weakest for the company in years. shares below 400 bucks for the first time since december 2011 on friday.

it has shed nearly 300 billion in market value since peaking at just above 705 a share in september. and it is, if you're asked to a cocktail party what the biggest company in the world is, it's not apple any wore. >> it changed last week spp. >> it switched to exxon mobil. in fact, if you look at the ochgzs market, options pricing on friday suggesting a post earnings move of about 7.5% by april 26th. which is this friday. the key, of course, is 7.5% which way? >> that is very true. >> that's a 15-point swing. >> let's get you through some of the other issues this morning. boeing is beginning to fix grounded dream liners, installing reinforced lithium ion batteries. they're finally here. the company started today with five jets owned by nippon airways.

it should make the first dreamliners ready to fly again in about a week. i still wonder if you are a passenger and your ticket says dreamliner on it or 787, how thrilled are you or not thrilled are you to get on that plane? >> i think if they're going to put them back in circulation, i'd be okay with it. >> if you have a ticket next week and you're on one of those flights, you're okay? >> i need more head room. if i get on another embrey air jet -- >> i get cramped in those things and you're about a foot and a half taller than i am. >> my strategy for these flights -- >> dead man's first class. >> no. i don't drink anything the first 24 hours before the flight because -- >> you have to get up and go to the bathroom? >> i can't fit. i yell at the plane, turn around, everybody. i'm not gerard depardeaux. i have class. >> that we can all question.

>> so if you're on a plane and you see brian, get nervous. >> a nice segue here, if you plan to fly this week, pay attention to this next story. faa furloughs, they just kicked in. some delays now appearing late yesterday in and is around new york. this st for the first time with travelers waiting more than an hour. delays were seen at other airports in the u.s. the faa furloughs affect 47,000 employees, including nearly 13,000 air traffic controllers. experts say the first real test is today when traffic increases and you remember, you saw all these stories, even last week saying the sequester doesn't matter. >> because a lot of the stuff hasn't kicked in. now, if things don't matter this week, then you can say they really don't matter. >> so this is the test one way or the other. we're going to talk to mike boyd about all this and more. >> in economic news, a business economist says washington's budget tightening is having a minimal effect on business. 93% of those surveyed say political developments had no

effect if the first quarter and 95% say they had no impact on capital spending plans. among the biggest concerns, global economic conditions and the potential for further government spending cuts and the regulatory environment. and listen up, everybody.it looks like fed chairman ben bernanke, he's going to to the annual jackson hole symposium this week. it may not sound like a big deal, but this is the first time he's marked that event since 2006. reuters quote the spokes woman who says bernanke is not planning on attending because of a personal scheduling conarthritic. they've used this forum to try ask preview important fed actions. just about every big move they've made along the way he has made public at jackson hole. people have been wondering if he was going to talk about a potential successor this time around. >> can i give you a conspiracy theory? if this is -- this is like your place.

if you run the fed, you go to this thing, right? and if this was going to be the last time you could go as the fed chairman, if you thought that he was going to be stepping down next fall or next spring, rather, you probably would find a way to show up. >> actually, i look ate more as him having not made up his mind yet. if you haven't decided whether you're going to stick around or not, you'll just avoid it. >> he constantly is being put on the spot. >> does bernanke go to parties? >> are you changing your mind? you are the one who said he was definitely out. >> i was under the impression that he was, two or three months ago or more maybe now, thinking that he didn't want to stick around. >> because i always wondered if he would leave. to me, i stink stick around because, look, this is your legacy and how this is unwound determines how everyone is going to see you for history. >> maybe i'm reading too much

into this. but i talked to one person who is close to him yesterday who said, that's a little weird. if you were really going, this would be your going away party and you would show up at your going away party, unless you're right, you don't want to experience that. >> honestly, i've always suspected he would want to stick around for this for the legacy, probably thinking he would unwind it better than anybody else. he knows what he did to lever it up. >> ask frequent street signs, guest host herb greenberg is apparently up and watching and he e-mailed me and said by the way, because he heard what we kauft about with cost cutting, you do not cut your way to prosperity. >> this is true. >> i would just -- define prosperity. >> as a nation. you can't cut your way to prosperity as a nation. >> then why are we rewarding these companies? why is the dow at record highs? one could argue that it has worked. i don't agree with the methods.

maybe herb can call in or something and we'll yell at him. >> i think the big question is what does it mean tore job creation? >> no. and we need companies to hire people. >> some companies would say as soon as there's demand, we will hire. it's a chicken and egg situation. >> time for your global markets report. kelly evans, standing by in london. what's going on around the world? >> brian, good morning. so the story largely centering around japan this morning as we all wake up. the nikkei surging there in a second. i'll show you what's happening with forex. we could see 100 on that dollar/yen cross. across europe, it's been a broadly positive attitude, as well. what's happening over here with the mib index in italy up 1.9%. we're off session highs, up better than 2%. the country's 87-year-old president has reluctantly been elected to a second term, but markets are xwrpting this for the positive. it means for the meantime monte will be continuing with the reforms. the quote of the morning was

coming from the head of the italian bill group who said italy is not belgium, referring to bull gem's long period without a government. nevertheless, italy doing well this morning and interestingly enough, entertain is, as well. these are higher than internal and sterns targets and market completely shrugging it off. spanish debt even rallying. we're now that 4.5% market for italy. we've seen significant rallies continue here. the sense of liquidity, perhaps, boosting equities across the continent. equities said to be quite cheap relative to markets. if you wanted a fly in the ointment today, it would probably be what's happening over here with copper. down 0.4%. there's been a lot of discussion about whether this is a bellwether, whether this is a story about china flowing while the rest powers ahead.

but you can see the fact that it's down now, 0.5% remains below that 320 mark. still has a lot of investors on original when it comes to global growth. and the fact that u.s. equities and commodities were so weak in the past week is another reason to for that, as well. gold, though, up 2.2%, so the volatility here remains extremely high this morning. brent crude rebounding, as well. same for nymex. the differentiation between what copper and crude are telling you is quite interesting. finally, let me close out coming back to this point, the dollar/yen is lower now, but it's been fluctuating back and forth between gains and losses all morning. we are at 99.76. so we're about 0.25 points away from hitting that 100 mark. it will be a bigger media story as you guys know with these kinds of psychological levels, as well. but a lot of traders are watching to see if they can punch through this level which it's clearly by headed for since last fall. what comes next? is that the top? is that a sign of more to come? this story boosting the nikkei

by about 2% overnight. so another huge move. a ton of japanese companies reporting earnings this week, as well. even as we get into the busy period for the u.s., europe ask japan will be telling us, as well, if those japanese stimulus policies are working. guys. >> kelly evans in london giving us the global markets perspective. more than that, even. now we have -- we're going to go to boston, talk about the marathon bombing case this morning. the wounded suspect is now responding to questions and cnbc's senior correspondent scott cohen joins us with the latest live there. scott. >> reporter: good morning, andrew. dzhokar tsarnaev is here at the medical center and responding to questions mostly in writing because one of his wounds is a wound to the throat. but now we know that for days before the big manhunt thursday/friday, he was hiding in plain sight, literally, at u mass at dartmouth where he is a

student. he was working out at the gym, even talking to fellow students about the bombings. >> he just said, yeah, tragedies happen, man. these things happen around the world. it's crazy. he seems very nonchalant. he didn't seem nefbus or negative. >> that was last scene about 1:00 on thursday afternoon. of course, hours after that, authorities had released the picture of him and his brother and they were on the run in a grisly and brutal man hunt/police chat that wound up in watertown, mass. and finally, using very sophisticated technology, the authorities found dzhokar tsarnaev hiding in a boat. he is in sewerus, but stable condition. in the meantime, boston is trying to get back to normal.

behind me, boyleston street. there is an attempt here now to heal a little bit and remember. it has been exactly a week since the bombing at the enof the boston marathon. at 2:50 p.m. today, the exact time that the bombs went off, there will be a moment of silence followed by church bells throughout boston. guys. >> scott, thank you very much. again, scott cohen who is in boston. joining us right now on set is colonel jeff jacobs. colonel, we know the who at this point, but don't quite understand the why. that's going to take quite a bit of time to dig through, i imagine. >> there's lots of speculation about their dis affectiaffectio. they came from that part of the company in the first place to escape what they perceived as persecution by the russians. the russians were focused by the fbi and nothing came of that.

we constantly ask about terrorists who have slipped into the united states both to help us and to help themselves. we work with them very, very closely. >> i guess the huge surprise about this is so many people around both of these boys didn't even seem to know the turn as it was coming. you heard from a student who said, look, he was talking about the bombings very nonchalantly saying, look, accidents like this happen around the world. you would think somebody would know something. >> yeah, you would think so. what is astonishing in this case is that in an age of social networks, when these guys posted their feelings on their sites and on facebook and all the rest 06 that stuff, that nobody picked up -- nobody picked up. >> what does this say about this being an intregs failure? one is he's going to russia.

the older brother is going to russia. on his way to russia, it's not that the u.s. decides there's a problem. it's the russians who call up and say we're not sure we even want him here. we sort of wave him through. there seems to be no additional follow-up on him. he comes back, apparently he's posting terrorist videos. >> the fbi did speak to him. >> spoke to him. but the second he comes back, it's posting terror u2 videos, sort of a new feeling towards islam. is there going to be a larger debate about what the failure is here from an intelligence perspective? >> well, there should have been. not just in this incident, but we're lousy in intelligence. the 9/11 commission said that the solution to the problem is that we need an intelligence hierarchy. we need a new director of intelligence. the fact is, we already have one. he was the director of the cia.

the trouble is not that we need more layers of supervision. we need the people who currently charged with the responsibility to supervise our intelligence community to do their job and they haven't been doing it. if you're to stens the agency -- there is a new intelligence that will continue to be a failure unless and until we get better at it. >> we know al qaeda had been active in the chechen region. we believe they designed this pressure cooker bomb in boston by looking at plans posted on an al qaeda website. that does not make this an al qaeda linked separation, nl necessarily, but from what you've said and to andrew's point from the russian government saying watch out for this guy, how would you read

this? >> al qaeda has been fragmented. after our operations in southwest asia, it's fragmented. so the central head direction of al qaeda doesn't exist any more. >> so al qaeda is more of an idea now. >> yes. it's good news and bad news. there's no central direction. that's good news. but it's bad news. it's all fragmented now and so there are lots of mom and pop al qaeda operations and apparently is one of them. >> does this change your view on profiling? religious, race or anything? >> i'm not adverse to profiling. there's nothing more to be said about that. >> we know most terrorist actions are men aged 18 to 25 years old, general lly loners, right? you don't even need to go on race. you can say if you're an angry 21-year-old guy who is posting rants on social media ask traveling town known areas -- >> do we have enough capabilities in terms of social

media, in terms of being able to track all the youtube videos and all the -- do we have the right people and the right technology to do that? >> we have the right technology. you never have enough people being able to do that. but we have no motivation for social reasons for political reaso reasons. we don't have the political will to do it. >> to do profiling or to do a closer watch of people's profiles? >> both. both. >> what is interesting to me, if i googled, you know, sailing lessons, new york city -- >> google follows you. >> google follows me. all of a sudden, i'll start getting ads from sailboat operations. this kid, man, terrorist, 26-year-old, how far old he was, is apparently looking up bomb making plans on al qaeda-linked websites based in yemen. why do we have a problem with -- if someone is looking those things up, why do we have a problem with that versus google or others saying, hey, sullivan

is -- >> behind the scenes, do we have a problem with that? meaning is the government saying we're not even looking at this? >> no, no. behind the scenes, the government doesn't have a problem with it. but it's a public relations and political problem. on the one hand, people do not care about whether every private enterprise in the world knowing anything about them. but crossing the line with the government knowing anything about them. >> it's something that becomes more difficult the further away you get from terrorist activities. the further away you got from 9/11, the more people were reluctant to allow you to do this. >> we have very short memories. when this current property of military leaders were graduating, vietnam had just ended and they said never again. if i get to be in charge, we're never going to do something where the objective is not specifically specified. we're not going to

incrementalize and do things little by little until we finally fail. they all swore that we wouldn't do it. 25, 30 years later, that's exactly -- >> you understand the right to privacy, you understand why people wouldn't want the government watching every move, but to brian's point, watching someone who is looking up things from an al qaeda yellen website -- >> the senior people have a tough time making a decision to say we're not looking at you, but we are going to look at you. >> it's kind of hard, though, colonel. if something looks up bomb making plans -- >> that's a person i would like tracked. >> everybody now who is earn the age of 100 knows that everything you do on the web is tracked. it's just bizarre. >> for every member of the intelligence committee in the congress who want to take a closer look at people like that,

there are 400 other members in the committee of congress that -- >> what is worried to me is you're saying behind the scenes we're doing it and in this case we missed it. >> if you haven't focused your attention on this stuff 100% of the time, you're bog do miss it. coming, ready or not, we have a busy week in the markets, we're going to ask if stocks can recover from their worst week of the year. next, we have two morgan stanley coasts, greg fleming is back and then one of the firm's newest hires, you know this man very well, gary kaminsky. we're going to talk markets, the economy and much, much more. stay tuned for that and a lot more.

welcome back. now to the markets. it's going to be a big weekend ahead. joining us, lou brian. lou, place your betts. more likely up or down for the dow this week? well, you know what? i tend to look technically at the s&p instead of the dow. >> how about the s&p? it's a broader market index, even better. >> all right. i think that the interesting thing is that where the s&p held last week, this 1540 is a mark that held in march and early april and, again, last week, we went just a little below it. also in play around that level is the 50-day moving average which held the market a couple of times.

if you're looking to get long on a tray, that's not a bed level because you kind of know where you're wrong when it goes underneath that. i think the interesting thing with the stock market is that it's really the only market right now that's playing along with the fed's qe brochure. don't fight the fed. buy on fed accommodation. the crude oil, the gold, copper, various commodities are lower since the beginning of the year when the fed began to expand its balance sheet again and in stark contrast with that is the stock market. also not playing along as it had in other qe adventures is the 10-year note. but when the fed first did qe starting back this '09, the ten-year note was about at 276% and when the qe ended, it was around at about 3.9%. next wee note was about 20.5. but this point, we're down about

35 pafts points in the recent weeks. >> good stuff. let me ask you more a direct question. 1543, if it does not hold on the s&p 500, what happened? >> well, then i think that -- and the reason i started wandering off on the qe stuff is because i do think that psychology, the qe is our back stock has been an important part of the move in the stocks. and if we go underneath that, the 1540 being technical, i would look at 1500 next and 1470 below that. but if the psychology starts to change and we start to look at the other markets that are not playing along with qe and then the stocks start to falter, as well, and they then don't play along with the qe, then you can get in trouble and you can easily test at 1500, 470 or other points depending on the psychology of the market. i think last week was our

perfect week. what are we, 3% off the highs. but this time, the trade is based a lot more on the psychology of it. a lot of times when that happens, the technicals start to come into play and that starts to chip away at the psychology. but like i said, we held it last week so we will see what happens. >> we will see what happens. lou, thank you very much for getting up early for us. appreciate it. thanks. when we come back, two of morgan stanley's best .brighter, craig fleming and gary kaminsky. both men will be joining us on set when "squawk box" comes ride back. [ penélope ] i found the best cafe in the world.

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welcome back to "squawk box" this morning. earnings set to dominate the week ahead and the markets. our guest host today, greg fleming, president of morgan stanley wealth management and a very familiar face to cnbc, our former colleague, gary kaminsky. we lost him to morgan stanley, greg took him where he is now vice chairman. that's a fancy title, isn't it? >> if you say so. >> and you tried to lure him away fruts? are you responsible for this? >> i was in great part responsible. what gather is doing is working with our financial advisers, helping them think about asset allocation. gather, as you know, was a very successful portfolio manager and most of his assets that he managed were raised through wealth management financial advisers. >> like some of the top advisers

at morgan stanley. >> so help us set the table this week. we had our werings coming up. everybody seems to be beating on the bottom line, but definitely not the top. and the market -- what are we, we had the worst week last week we've had all year. so if you're an investor and we're coming off the bombing in boston, it's just, you know, there seems to be this sort of tense sense that all the parties -- is it the way they ended or is it just that they slowed down? >> things in the american economy in particular are slowly and steadily getting better. but that's against the back drop of us coming out of the biggest credit crisis in a generation and the deaf leveraging process that goes on there against, you know, the fact that the economy is getting better in the near term. those two things are still running against each other a little bit. so, you know, you had the s&p up 11% in the first quarter. that wasn't a path.

you're not going to take 11% in the first quarter and have 44% for the year. so there are ups and downs. but i think the american economy is on a solid, steady progression towards better ask better conditions. >> so what have you learned? now that you're on the other side and you're -- >> you're talking to people in a different way. you were always talking to people when you're here. what have you learned? >> we're going to give you some proprietary data and our clients and survey a little later in the 7:00 hour, so that's a good tease. but what i can tell you is that i still speak to many of the people that i talked to a daily basis when i was here the last four years that helped me drive a lot of the capital markets out there and the things that we put together. what i will tell you is that, yes, we're in earnings season right now. but at the end of the day, 80% of what happens in the equity markets, not just here but around the world continues to be driven by the central bank. so we will report -- i keep saying we.

you will report on the earnings every day. there will be movement and specific securities, stocks, related to those earnings. but at the end of the day, the movement to equities will continue to be driven by the central banks and the easing monetary policy around the world. that is the underlying drop back that i've heard. nothing is going to change from what i've heard. the easy money only got easier. >> the one thing that's weefrd is everybody is trying to figure out when the easy money ends, when the central bank turns it off. do people try and get ahead of it by positioning their portfolios for that or is it way too early to think about that? >> what's interesting about that, becky, is the fact that that's been called a number of times already. back in 2009, the notion that interest rates would be effectively zero as you head towards the middle of 2013. nobody thought it then. every time there is a bit of a crack, people talk about the fact that rates may not go up for years as opposed to a

shorter period of time. so i think it emphasizes the importance of trying to take a medium term view and not reacting to what happens. >> but if i believe that the fed will stop qe eventually, when it will, at some point the tap will be under off. and if i believe, gary, i've just made the case to sell my stocks. >> here is the problem with that. historically, equity markets have traditionally done better in a liezing interest rate environment. that is -- >> and bonldz are destroyed. >> that is also balk of the fact that the economy is growing. so the answer is, the distortion, the manipulation that is being done by the central banks as a result of 2008/2009, we don't know tans to that. nobody knows. but the importance of asset allocation and the important of working with professionals to

try to make a decision -- because what i will tell you is people sat on their hands. we all know that. they sat on their hands for many years. >> and some are sit sitting waiting for the approximatelyback. >> they've come to the generation that if you are an individual investors, you have to come to the relation now that you need to do something about it. the daddy which we will release later which will show you what people are doing as a result of that. >> is that a sent you get from people. >> it is. becky, again, because of what happens with the credit crisis, the economy is pulling out of it slowly. brian is talking about central banks and the impact there. because of that, investors generally still remain more cautious than they otherwise would have coming out of other cycles.

when you have an s&p up 11% in one quarter -- >> shouldn't we feel pretty good, greg? that's my point. >> i think we feel better, but not as good as we would have after most other cycles because of what happened in this cycle. and it's very unique what the central banks are doing here, rates at zero. so how that plays out as the central banks pullback, nobody knows how that's going to occur. so on if the u.s. economy starts to get traction and starts to go in the right direction on a more sustained path and the fed and the other central banks start pulling back, that transition could work. it's a challenge. but we've never seen this. the thing going on are new to this generation. >> what's the difference right now between the pros, the hedge funds, institutional investors and some of the clients, some of whom may be your same clients, but maybe some of the retail group. most of the hedge fund managers in the first rt yeaher who try to reduce tail risk and hedge

their portfolios, underperform on a relative basis dramatically. at least for the fist quarter of 2013 the best strategy was get long in the market, not put any insurance on the portfolio. so the individual investors in many cases outperformed the pros. >> the stock itself came down last week. you had earnings last week. you are the ten poll in this business right now. wealth management is what is keeping this whole thing going. >> the sport they're leaving didn't do so well, but the one they are going to did. that's you. the question is, ultimately, does your business make up for the business that they're leaving? >> i'd say two things here. first of all, health management here, including driving pretax earnings growth, we were at 17%

plus in the first quarter. but if you go back to 3009, this wealth management business formed. and that business now is one of the pillars of morgan stanley. what james put in motion was the transformation of the company where wealth management would be a significant part of it, but we still have best in class investment banking. a fixed income business that is transitioning where they're pulling down risk weighted assets and are moved tore a trading issue in a few years. and the business mix of morgan stanley as a firm with the businesses i just walked through and we have an asset management business growing nicely, as well, that business mix we think

is one of the best business mixes around. we are very optimistic on where we stand with this whole thing coming together. >> andrew, what you saw last week, as well, that the strategy that james gorman has laid out and that the company is following predicts a larger multiples earnings screen, which means stockholders and everybody benefits. >> that's the goal. we can talk about the mix and a lot more, greg and gather will stick with us for the rest of the program. when we come back, we'll talk about why airports could be experiencing longer than normal delays today. if you are traveling today, you'll want to hear this. think sequestration. first, hasbro recording earnings of 5 cents a share ex items. that was better than expected. revenues beat the street. at tyco integrated security, we consider ourselves business optimizers.

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it is official. faa furloughs have kicked in. some delays appeared yesterday in and around the new york area to travelers waiting more than an hour, to which i would say, what's new? joining us now, mike boyd, chairman of boyd international. mike, i've been traveling a lot lately and i've noticed anecdotally that tsa workers are moving more slowly than even they were before. do you think there might be a point that's trying to be proven here? >> oh, absolutely. this is all political. i mean, the secretary of transportation is going to make very sure this is gummed up as much as possible so he can make a point, the idea being we need more taxes. this whole cutback thing is bogus.

after sequestration, the faa will have 5% more money than they did five years ago and will handle about 8% fewer flights. so these cutbacks, it's political. it's not functional. >> 5% more money than five years ago. 8% fewer flights. mike, listen, again, ant ek totally, i agree with you. but how would the faa or tsa or whoever it is execute that plan? they can't send out an e-mail, right, move more slowly than you normally do because that will get out into the hands of the media. how would you accomplish something like that? >> you lay people off or you do what homeland security did, you just cutback on overtime and the people, why do i have to work so hard? this whole thing is orchestrated by the administration. we don't have to lay these controls off, on the tsa side -- there's no waste at the tsa. we all know that. the reality of the whole thing is this is something to make it hard as possible. it's going to hurt commute

percent? i have been to an airport recently where there are more tsa workers than they were people getting on the plane on an early morning flight. >> they're overstaffed all right. >> it is. got love those people in the blue shirts, but that's a messy organization. what we're going to go through is the administration to im post regulations. >> if you're somebody who is flying today, whether it be for personal or business, you'll be mad with two hours or more delays. >> absolutely. but you should be mad at the government because they're the ones doing it. we can a paco strike that gummed up the system. now the government is doing it. and it's very important that the people understand the real facts here. it's not just sequestration. it's what the secretary of transportation is doing to make sure that sequestration hits the right nerves rather than

protects the people. >> what's the counter argument? you lay out a firely strong case for the numbers. 5% more money, 8% fewer flights. what does tsa say in response? we have more than we need to do? >> this is faa, not tsa. but la hood knows all he has to do is say, that's the way it is, it's terrible. most people buy it. are you going to argue with this guy? you should. most people say, sequestration is terrible. we don't have enough money. when you look beyond it, and is we have to look beyond it, labor unions are, the organizations that represent airlines do. they'll all be on it. >> mike, real quick. gary, you're taking a trip today? i do have to fly today, yes. >> and the question is, if you're waking up this morning, you have a choice of which airport you're going to, he's going to laguardia, maybe, new york or jfk. >> give me some advice. >> what do you do? we're trying to get him into teet teeterboro. mike? >> any airport is going to get gummed up. >> it doesn't matter?

>> no. look, your delay out of laguardia means you're going to miss your connection in chicago. so it's a whole system. omaha is going to get hit, lincoln is going to get hit, everybody is going to get hi it. >> but to be fair, we should have higher security now after we've learned what two idiots and a pressure cooker can do in boston. are we not? so we have budget cuts, a bitter tsa, you're laying out the case, mike -- and flying, as we know, if you're over 5'2", already it is a miserable experience. flying is going to be even more miserable than it has been in a while. correct? >> no way out of it. again, when the government try toes shut down the system as they're doing, it's going to get miserable. they have professionals doing this this time. >> mike boyd, thank you very much, i think. >> thank you. >> good news. go greyhound. >> coming up, we've got -- >> i'm a little bitter myself. a frequent traveler, taller guy.

but i'm in the tsa trusted traveler program so i breeze right through. although after that interview, i may now be off it. >> coming up, much more from morgan stanley wealth management team where they're putting their money to work right now. in the next hour, an early candidate for the stock of the week, apple.

welcome welcome back, everybody. we are back with our guest host

for today. morgan stanley's greg fleming and gary swre mansky. i know we have just in a few minutes we'll be talking a little bit more about the study that you have from a lot of people you have looked at. if you try to figure out what this information will tell you, why do people care what some of the high net worth individuals are saying about this. >> you care because we're going to be breaking things out regionally. it will show you how to be a better inner. certainly areas of the country are doing much better than other areas of the country. that leads to companies benefitting from those regional economies will be those companies that do better. additionally the certain asset classes like in the commodity area that have been very volatile, i think we have some data that will show you that despite the volatility investors seem to be on a steady asset allocation path. >> the other thing the data

shows is investors continue to be of two minds. they're cautious because of everything that's happened the last five or six years. at the same time they're looking for higher yield and better return on their investments. they're starting to put their toes back in the water. but they're not jumping anything wholeheartedly. >> they're probably worried they missed out on the big gains they have seep in the equity markets. do i jump in or do i wait? >> and the data does really show the conflicting instincts. >> we're going to hear about the big asset class in the news lately. it rhymes with old, mold. >> we'll talk a lot more about that when we come back. and the latest on the boston investigation. and then at 8:00 eastern time, caterpillar ceo and his company's view on the economy. revolutionizing an industry can be a tough act to follow,

but at xerox we've embraced a new role. working behind the scenes to provide companies with services... like helping hr departments manage benefits and pensions for over 11 million employees. reducing document costs by up to 30%... and processing $421 billion dollars in accounts payables each year. helping thousands of companies simplify how work gets done. how's that for an encore? with xerox, you're ready for real busi.

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we have morgan stanley president fleming. things are slowly and steadily getting better. >> the move will continue to be driven by central banks. >> they will help us make sense of what to watch. >> your tools of the trade. oil and gold in perspective as we get ready for what could be another volatile week for commodities. look at what you should be watching and where you could make some money. >> plus, apple's earnings. the company reports tomorrow what you should be expecting and what you should do with the shares today, whether or not the tech giant can fly high once

again as the second hour of sidewalk box begins right now. good morning, everybody. welcome to "squawk box" on cnbc. brian sullivan is in for joe today. nbc family of networks is kicking off earth week today. we will shine the spotlight on issues related to the environment. go green campaign now in its sixth year. it educates consumers on how their own behavior affects the state of the planet. we have been watching futures this morning. they are sharply higher after watching what was the worst week for the markets in many, many months last week. dow up 60 points above fair value. our guest host is gary kaminsky.

and morgan stanley wealth management. we will hear from both of them. we will get the numbers from caterpillar. looking for $1.40 a share on $13.7 billion. an hour from now we will ask caterpillar ceo of about the heavy equipment maker's quarter. it tells you an awful lot what they are sewing in the global economy. and boeing could get formal approval to return the grounded 787 jet to the air. the battery system is the issue that caused it to be taken out of service in the first place. gas prices are continuing to drive. the latest lumberg survey shows prices down 11 cents the last two weeks. and the average price of regular gasoline is now $3.54 a gallon.

that is 37 cents lower than just a year ago >> and the suspect in last week's marathon bomb, now responding to investigator's questions. law enforcement trying to piece together what was behind the attacks. scott cohn has the latest on the investigation. good morning, scott. >> good morning, andrew. we expect there could be criminal charges against dzhokhar tsarnaev today. chillingly after the bombing a week with ago today, he and his brother tamerlan appeared to resume their normal lives. friends say he was at dartmouth, work withing out at the gym, talking about the bombing. and they are still in disbelief. >> it's hard top comprehend someone could go doing normal college kid stuff to bombing a

marathon. >> and that about the older brother, tamerlan, 26 years old? he apparently talked to his parents in russia after the bombing and said everything was okay. he he went back to russia last year and was not interviewed afterwards. that has some on capitol hill wondering how did the intelligent agencies miss this? >> the fact that we could not track him as to be fixed. it's people like this that you don't want to let out of your site. this was a mistake. i don't know if our laws are in sufficient or the fbi failed but we're at war with radical islamists and we need to up our game. >> on "squawk box" last hour, he said the the whole thing this doesn't need is more interference with congress. >> we're lousy at intelligence. not that we need more layers of

supervision. we need the people currently charged with the responsibility to supervise our intelligent activities to do their jobs. >> so the post port 'ems are beginning. and boston is trying to get back to normal to some degree. boylston street behind me is still a crime scene. they are hoping to reopen the streets in the next couple days. at 2:50 this afternoon, exactly one week after the bombing, church bells will toll. >> we're going to be joined by michelle caruso-cabrera. one of the big questions is why? what happened? what motivated this? we know about their recent trips to russia. >> in the immediate term we would like to know from this kid, this 19-year-old, is there more to come? that's the first order of business. the second order of business, is this part of a larger group?

it's probably a shade of gray. what is clear at a minimum they were motivated by the situation in chechnya. the russians have crushed the chechen rebel yon twice in the '90s. that inspired a lot of individuals around the world, including americans who have been convicted for supporting al qaeda. one of the things they have cited is sympathy with the chechens -- >> i don't understand the attack in boston. >> the median arm has officially said there is no connection between these individuals, right? to your point they may not understand that either it started out secular. the original rebel yon was

communists. it became islamasized in the mid-90s. >> the russians alerted our fbi about the potential danger of this kid. >> yes. >> the fbi met with them, established either he wasn't a threat or wasn't enough of a threat to do something. we obviously know that to be bogus now. we wonder what he did, tamerlan, over there that caused the russian eyebrows to be raised enough to call our fbi and say watch out for the kid. >> before he even comes back and posting youtube videos. >> they talked to him in 2011. how many 20-year-olds do you know dream of glory in some form or fashion and spend a lot of weird time on the internet? at some point it's the fbi's judgment when they talked to the

individual. >> but you don't look up bomb-making planning on al qaeda-based yemeny web sites. >> i bet a lot of people do to see if they can. >> most of the evidence that's come in in terms of postings have not been chechen related. >> islamic. >> on his russian facebook page. >> so you have two things happening. scott wants in? scott? >> i think you're hitting on it there. i think, you know, it's dubious whether there's any connection with the chechen in surgery. that's not what tamerlan was posting about purchase you have to look back and look at some of the personal things going on. this is amateur psycho analysis on my part. he had a lot going on in his

life. he had been radicalized for whatever reason. perhaps radicalized his brother as well. and so the motivation -- there's probably a lot more shades of gray here than we necessarily want to admit here. >> scott, i was just going to say the mayor has suggested these gentlemen -- i shouldn't call them gentlemen anymore. the terrorists acted alone. i say this with caution, the daily myirror saying they're looking at 12 other people. i don't know who these people are. there is going to be a question longer term, should we come out and say, yes, it's just acting alone immediately when perhaps we will find out later if even there weren't people involved, there were accomplishes or even knew something about this. >> i think the daily mirror

reports discredited. i think it might be subtle. were they acting at the direction of some larger group of al qaeda, or were they influenced, were they -- was this the type of propaganda and information that tamerlan was drawn to for whatever it was that had so disturbed him and this was a way of lashing out? again, we may not ever know perhaps whether the brother will be able to shed light on that when he is in a little bit better shape. but, you know, is it going to be a clear-cut conspiracy with al qaeda involvement? it sounds like nothing here is going to be clear-cut, quite frankly. >> i have a quick question, this issue about miranda rights and whether a terrorist or accused terrorist is supposed to have their miranda rights read to

them. do you know if they actually read them the miranda rights? >> i don't know yet. presumably that may happen before there are charges. but there is a public safety exception where they can delay reading him his rights. as you know, there are all these calls to try him as an enemy combatant as opposed to within the criminal justice system, which seems to be what the obama administration will do. after all, he is a u.s. citizen. he carried out the crime on u.s. soil. and there doesn't seem to be a whole lot of legal basis to try him as enemy combatant, which is not to say there aren't going to be more calls particularly from the right to do just that. >> when in theory you have so much evidence on american soil, why tarnish the prosecution by

going enemy combatant. if you have no backlash from anybody who says you didn't do it the right way. >> he stole a suspect. but clearly -- you've got to walk through the process, right? >> i was thinking this weekend, again, and i'm speculating, you read the articles. we know now he ran after his own brother. you know what the defense is going to be. i was brainwashed by my brother. i ran over him to get away. >> the older brother, basically was even asked to leave his own mosque because his anti-american views were so strong that the islamic community in cambridge was outraged. >> if they saw this happen, raise this question and raise him and bring this issue to the officials?

>> yes. >> that's the other piece of that that year going to be talking about. thank you in boston. michelle, thank you. anything that you see here on "squawk", shoot us an e-mail or follow us on twitter. coming up next, market insight from flem. and morgan stanley. and gold on the rebound after a big slide. find out what's driving the move back above $1,400. plus, what is apple bringing to the earnings table? we tell you what we should be looking for when numbers come out tomorrow. [ engine revving ] ♪ [ male announcer ] every car we build must make adrenaline pump and pulses quicken. ♪ to help you not just stay alive...

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back,elcome welcome back, everybody. looking at the futures. right now you will see green arrows. up 62 for the dow. s&p up 6.5. this comes after the worst performance for the market in many, many months on every level last week. oil field services giant halliburton reported profit of 67 cents a share, 10 cents better than the street was expecting. revenue slightly above forecast.

halliburton saw lower prices in america. stock up 5% this morning. there's a new survey out by morgan stanley that shows "high net worth" individuals are optimistic about reaching their goals. the president of morgan stanley wealth management. and vice chairman of morgan stanley. and high net individuals and those who have sets of 100,000 to invest. it probably tells you about where people have been looking and trying to put a lot of money what they're feeling about things. >> we periodically go out and talk to investors and we call these pulse checks to see how people are feeling. as you said, we talked to 1,000 investors with liquid assets 100,000. and a third more than a million dollars. investors on balance are more

optimistic. they are starting to invest more in assets and instruments where they're reaching for yield, equities, et cetera. they remain more cautious than they might typically be at this point in the cycle with the kind of market we have had. >> probably not surprising when you realize what we have been through in 2008 that people are gun shy. the problem is if they haven't commit thad have they missed out on a big part of this run or do you think there's more room? >> the other thing i would say is u.s. mutual funds have turned positive in 2013 as well. so investors are getting back into the u.s. market. i think ultimately where they get into the market, the specific point is probably less important than what's going to happen in the u.s. economy. will will the u.s. economy move forward on a sustained basis the next three or four years and the stock market will follow.

and if you believe that, then, you know, allocating a higher percentage of assets through equities makes sense. >> you know, becky, i think put on my former p.m. hat, pre-cnbc when i was running money, you have key indicators, lagging indicators and the lagging indicators. what i hear and what i see here is very simple, the idea of a bond bubble, and i felt this way for some time, it's not going to happen. asset allocation in a lot of our clients as a result of 2000 is not going to change. despite what interest rates may be telling you about negative real returns there's going to be a specific allocation to fixed income and it's going to remain because of the need for safety. >> if the fed was not buying treasuries. >> manipulating the bond market. >> fair enough. i should have said that. >> i said it in the 6:00 hour and you told me i was crazy.

>> manipulation is a strong word with a connotation of malfeasance. we can go to general electric will island. that's a whole different "squawk box". 4% used to be low. everybody was dancing. now, 4% will obliterate us on the up side. >> here's the problem with that. i can put two expert bond market portfolios on the set. one would give you good reasons why it should be 3/4 of a percent. i can also put somebody here who has been the best bond manager the last decade and he can tell you why it will be 1%. it will continue to be whether they are buying assets or not. so the answer is you don't know

what the actual -- where fixed income rates should be is not clear because of what has happened since quantitative easing began. despite what real rates may say, the money on fixed income is not going to change. what you are going to see, as greg pointed to, a lot of money in cash. it is moving into equities. no, it's not too late to buy into stocks. because the fact of the matter is equities provide for a total return with dividends reinvested. that is what people are looking at now. they're not saying what did i miss since 2009. >> let's talk about that. you just good investment prospects for 2013. almost half thought gold was a good prospect. was this survey before and after the massive decline we have seen the last week and a half. >> it was before. >> and, you know, i think one of

the things that shows is investors, again, looking at multiple different parts of the global economy and looking for potential inflation hedge and treating gold as part of an overall asset allocation in framework. and commodities more broadly are part -- >> do you think you would get the same results today with people just watching hundreds of dollars drop off that asset? >> this comes back to morgan stanley wealth management. the other thing this survey shows is that investors, more than ever before, are looking for financial advice. and the&our financial advisers do take into account what's happening in the cycle in the near term. >> would they have put people in gold heavily? >> if they did it would be part of asset allocation framework in place through the cycle. >> if you liked gold a month ago you should love it now. this is what i don't

understand -- >> but i bet the retail investors flies the other direction. >> there's retail investors who try to do it themselves. when you go back and look at the history of 2009, they sold stocks march of 2009. they basically unloaded their portfolios the first couple days of march. many of those people go last week. if you look at a longer term basis, the same people that held stocks through the 2009 period and basically continued to stay the course. again, that's why you need professional advice. listen, i have spoken to a number of our fas and i don't think that the survey would be that much different, this is my opinion now, based on the fact that the asset allocation to gold is driven by the belief that the easy money policies around the world make it necessary to have a certain percentage of your asset sale. >> so those people are double

down? >> you never average down on a trade. >> you commit a certain amount of capital and try to stay the course. >> if you listen to the negative nellie's, and they were proven correct, you saved a 50% haircut on your stocks. fair enough. you missed 100 person gain with if you listened to the uber bears you to adjust based on where things are. i'm 41 years old. i want to double cost average -- if stocks aren't higher when i'm 65, you're probably living in a cave and the zombie apocalypse actually occurred.

in 24 years you think the dow will be higher than it is now? from 39 to 54, we had 25 years until the dow went above its level in '39 or '37. >> one of the things that the last five or six years has proven, it's very difficult for any human being or group to predict what's going to happen, near term or medium term. go look at the data and the literature. how many people were talking about zero interest rates in 2013 with the prospect for potential several more years of that. against that back drop, having great financial vice and framework that doesn't deviate every time there's a short-term sick cal market. >> andrew, it's about dealing with the reality that you're faced with today. rick santelli and i spoke the last several years multiple times about the punitive nature for savers. those who followed the rules and

did everything they were supposed to do. brian, you and i had this conversation many times. their fixed income assets are not producing the type of assets they expected. there has never been a more important time to asset things. it's just the reality of now i have to think about where i generate the income. because i did follow the rules. what i heard in the last month there are millions of people in this country. i knew it. but it's been proven they need to make the decision. >> we have 16,700 financial advisers. so you're going to have different views. the thing we try to help all do is bring products, services and intellectual capital so they can make appropriate determinations for the different clients they have. the views will be different.

you want the steadiness to be in place across all of them and we think it has. >> appreciate your time. and of course gary is our guest host with us for the rest of the program. coming up next, sports. taking time to reflect on the victims of the boston marathon bombings. then it's your tools of the trade. find out what's moving oil and gold markets and what it means for your money. revolutionizing an industry can be a tough act to follow, but at xerox we've embraced a new role. working behind the scenes to provide companies with services...

like helping hr departments manage benefits and pensions for over 11 million employees. reducing document costs by up to 30%... and processing $421 billion dollars in accounts payables each year. helping thousands of companies simplify how work gets done. how's that for an encore? with xerox, you're ready for real business.

welcome back welcome back to "squawk box". in headlines this morning, a fresh read on the housing market today. national association of realtors will report march existing home sales at 10:00 eastern time this morning. looking for a rise of 0.8%. the senate likely to vote today on a bill requiring internet retailers to require sales tax on all sales. today's vote is whether to end the debate. >> john was sending out an

e-mail to all ebay customers. it's pretty amazing. he's trying to mobilize them. caterpillar out with its earnings. it looks like a miss. earnings per share 1.31. they were expecting 1.40. $13.2 billion in sales. street was expecting $13.7 billion. stock is one that has been under quite a bit of pressure. shares down seven and a half%. you might very well see some weaker than expected numbers and you might see cuts to the guidance as well. >> and a big sales cut too. i'm just going to read this here. they see fiscal year 2013 sales 57 to 61 billion. the previous had been 60 to 68. one wonders if much of this is

china or how much of this is china. you know a lot of it is going to be the commodity crush we have been talking about. >> that was their earlier guidance. expectations on the street were for $16.7 billion. so they were above the high end of the new lower guidance. 62.7 is where the street was for that number. there's comments from doug oberhelmen. the first quarter 2013 would be challenging, and it certainly was. as expected, inventory changes. caterpillar and dealers add for higher end user demand in the spring and summer. $2 billion to inventory. this year they cut inventory by half a billion dollars.

they also say that in the first quarter 2012 they added machinery $875 million. this year they reduced inventory. significant year-to-year swings, coupled with end user demand, result in sales and revenues being down. they are not trying to put any gloss on this. >> the outlook park is a mixed picture. conditions may seem relatively stable. we continue to expect slow growth. we're concerned about economic growth in u.s. and china. they are pleased of the relative stability so far. >> $7.5 billion buyback they instituted five years ago. they haven't bought a share of their own stock since december

2008. but they are saying we're going to buy more shares now and resume that $7.5 billion program. >> just going back to the idea about fed, gdp, growth, interest rates, caterpillar used to have a high correlation of predicting revenues based on where gdp would be. they're going to add -- i'm going to take a guess and say right now, again, given the easy money policies around the world, it's very hard to figure out where the future demand is because of the type of distortion that's happening. here's a perfect example we just spoke about. they should be able to give you exact predictability and they can't. >> they will also tell you the bright point of all of this, sales in china were higher in 2013 than they were a year earlier. and their machinery inventories declined from a year ago.

the dropoff in the stock is not as significant as it was. down slightly. it's trading between 79.90 after closing 80.43. we have doug coming up at 8:00 to talk more about the numbers. >> if you have comments, questions, shoot us an e-mail or follow us on twitter. maold, gold, and equities. what's moving markets. then it's been a rough ride for apple thus far in 2013. what to expect when the company reports earnings tomorrow. hello!

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and welcome and welcome back. with the events this boston this week, the sports world took the time to reflect and to help the healing process begin.

sprint cup carried boston strong. there were many boston red sox caps in the crowd. they had their numbers with the boston marathon bibs. they raced with heavy heart because employee andrew collier lost his brother. his brother was m.i.t. sean collier. he was sitting in his car, doing what he did, what he loved. his brother is an engine builder for hendrick motorsports. >> hard to go from that back to the markets but we're going to try. covering gold is founder and president of green day. let's talk gold. let's start with gold. >> sure. >> what the heck is happening?

>>. >> it's been a heck of a roller coaster, number one. number two, what's happening is there was an equilibrium change. we hit the 1500 level and the market just broke. after that, you have the goldman announcement about the fact that they thought gold was going to come off. you had the cyprus rumor. and it just became a snowball. once the market kicked in it just went. >> if you liked gold a month ago you should love gold now. what happened here? >> unck that's what you're seeing with the balance today. there's actually a report that the etf volume, there was a huge drawback in money taken it of gold. the open interest actually went off. so a lot of true buyers of gold are coming back into the market. that's where you're seeing the bounce today.

>> i have to follow up. david, explain to me, please, what you mean. the gld, most active security, and you're looking at the futures, explain to us what that means. then i'll answer that question. >> you have a lot of average trader in the gld. i think they all got scared out, blown out. that's where you saw this massive exit from the gld. gold didn't have enough to hold itself up. stkph we are seeing the down side. i have to higher a security guard. it's hard to sell gold.

there's reason to be nervous, is there not? >> all these products that are made, once the exchanges went public and went for profit, they had to come out with all these instruments to make money. and it doesn't necessarily mean it's safe for the public to go into. now they can trade through the etf. and all of a sudden they come in and get a little bit over their head. a lot of people lost a lot of money in the last week. it's a problem. >> what are you telling clients right now when they call up on this issue? >> let me just r something to you. then i'll answer the the question. it's difficult to not be long. the answer is very simple. the futures market is telling you that the professionals who moved to gold are not going to be influenced by what the gld is doing. the answer is gold should be

part of an overall asset allocation because it is the one -- well, you work individually with each individual fa depending what your total asset allocation is. i do believe, and i believe for some time gold is like buying insurance on your home or car. if you have this easy money policy it's going to continue forever. >> dan, let's talk for a s.e.c. >> s.e.c. is right. >> disconnect between what's going on. when that gets broken as it has the last couple weeks, it's a very good sign. that is a very good sign. that's not something we have had until the last couple of weeks.

i think that you have a little bit of down side left in this. i'm not going to go on with the rest of the analysts jumping on the swing swoon particularly in the domestic crudes doing very, very well. >> isn't it amazing we're talking about the mid to high $80 range. it is like a swoon. a few years ago $85 was going to destroy the economy. >> we're in the clear now. it's absolutely untrue. the european crudes is dropping the real price of the gasoline at the pumps.

>> it's so cheap i'm filling the kiddy pool. >> it's not cheap. but we're getting a little bit of break of. >> such a gross visual. >> thanks. >> you don't know what i look like covered in oil and you won't. >> thank you for that visual. >> t.m.i.. up next, earnings central kicks into high gear. apple quarterly results tomorrow after the bell. we'll let you know whether it's buy, hold or sell. and the next hour, man of the hour this hour, ceo of caterpillar will talk about his company's results. they're going forward in a pretty big way but remain optimistic on housing. we will square some of those with cat tractor. (announcer) at scottrade, our clients trade and invest

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welcome welcome back. good monday morning. bruising winter for apple.

now back to 2011 levels. but that could change tomorrow or become worse. dan, your thoughts on what we can expect with a bleeding stop or more bad news? >> i think the the best way to look at it is to expect the worse. we're looking for revenues up 6%. earnings down 19% year over year. i can't find where earnings were down year over year. earnings grew 60%. we should expect the worse. in some ways almost hope for the worst to finish the bleeding. we expect them to be conservative, as they always are. the question is not this quarter or next quarter but next year and the year after that. eight times earnings, 2% dividend probably goes up. you're not being asked to play a lot for the prospect that maybe

apple grows again. maybe they invent a new product that people get excited about again and the stock goes back up. it's at reasonable levels but expect the worse going in. >> we talk about new products, okay, danielment they tweet things. maybe we get the iphone 5s. these are adjustments. do you see anything on the horizon with apple that is going to be ground breaking. >> i don't predict what that product is going to be. this is a company with a 30-year track record of completely reinventing products. they reinvented the pc. they destroyed the pc market when they put out -- >> let me make a guess then. i guess it will be apple tv. >> apple tv is a logical extension of the largest screen that the ipad was, and bringing

apps to the tv environment what everyone is trying to do. >> but they have a tv product. i have one at home. $99. a little black pox. >> it's not the real tv. >> why buy a $2,000 actual physical television when for 99 bucks i convert my physical television. >> today it doesn't have the one thing that made the iphone take off, which is applications. it was at revolution that really took off, what people could do from a personal assistant, games, entertainment and a corporate standpoint. >> dan, do you hear any chatter out there? >> we heard about channel checks, things around. this is probably a year and a half ago, two years ago. is there anything you've heard that gives you any sense that

there's something coming. >> so i attempt not to recommend stocks based on chatter. what i would invest in investing in apple is a track record, a team. phenomenal balance sheet. they spend a lot on r&d. you can't predict what the next will be. everyone said tablets will never work. now they are killing the pc market. what i would have bet on, what i would have invested in is a track record of innovation. >> listen, we're going to find out tomorrow night. >> hopefully you won't. they're not going to tell you what the innovation is tomorrow night. they will report earnings down 20% year over year. >> it's what they say. and the one thing which we can all agree on is apple is now the most important earnings on wall

street, correct? >> i agree. >> yeah. they move markets. a lot of companies simply can't. thank you very much. viewers, do not forget to play armchair analyst. vote in our poll. will apple, a, meet, b beat, or c miss expectations. six people were out sick. >> brian, you always have a seat. >> by the way, i have to take issue with you. i don't think apple is the most important. i think it's caterpillar. we just got the numbers. they missed the expectations. i know what you're thinking...

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price target price target cut from 24 to 22. they had been optimistic on g.e. for a number of years. so this is a multiyear reversal call on g.e. >> big deal. take a look at shares of

caterpillar. the company came out for earnings. that stock is trading higher right now. we'll find out why. they gave guidance below expectations. maybe the street had been anticipating this. the chairman and ceo is going to talk to us in just a couple minutes to explain what happened and what he sees around the globe. also, take a look at u.s. equity futures. dow 40 points. [ female announcer ] it's time for the annual shareholders meeting.

♪ there'll be the usual presentations on research. and development. some new members of the team will be introduced. the chairman emeritus will distribute his usual wisdom. and you? well, you're the chief life officer. you just need the right professional to help you take charge. ♪ to help you take charge. want to save on electricity? don't use it. live like they did long ago.

or just turn off the lights when you leave a room. you can conserve energy wisely. the more you know. caterpillar reporting. >> earnings 1.31. street expecting 1.40. sequester could mean delays at the airport. faa furloughs now in effect. we'll tell you how it might impact your travel plans. and the latest on the bombing suspects. a former cia director and former chief of staff of homeland security. third hour of "squawk box" begins right now.

welcome back to "squawk box" here on cnbc. i'm becky quick along with brian sullivan in for joe today. >> thank you. >> our guest host is vice chairman. more from gary in a minute. first, andrew has your morning headlines. boeing is beginning to fix the grounded dream liners. the company started today with five jets all owned by on the pond. the process apparently will take a week. the first dream liners ready to fly. according to becky and brian, you're both prepared to jump. >> i would fly if they offered me a ride. >> not after this. sort of my earlier rant in the show. our guest was right. i looked it up and put it on twitter, by the the way. faa budget has grown 13% from

2006 to the next fiscal year. most private sector businesses cutting back. so now they're scream building how, oh, we're doomed. the sequester. you have had a pretty good growth run. >> traffic is down 8%. you have to wonder what they're being asked to do. i don't know the answers to that. >> unionization of the tsa? >> global entry. >> i don't. >> you need to get it. it gets you right through all the lines. >> when it works. >> $100. when it works. a quick check on the markets, u.s. stocks are coming off their worst week in five months. they each lost 2%. dow is moving up 33.5 points. nasdaq up nine. in asia overnight, stocks traded higher. nikkei closing near a five-year

high. shank lie composite fell slightly from a three-week high it hit on friday. we have to take a quick check and see what's going on in europe. we have green arrows there. the cac up about .35%. >> caterpillar out with earnings. nine cents below what the street was expecting. revenue lower than expected. but the stock has been trading higher, believe it or not. joining us first on cnbc is the chairman and ceo of caterpillar. doug, i want to thank you for coming up on this morning. >> good morning, becky. how are you today? good to see you as always. >> good to see you too. i want to thank you for coming on. you had disappointing results. but i have to tell you you're a straight shooter. you always tell people what you see. and you don't minutes words. what's going on? why don't you tell us about what you see around the globe and what your expectations are for the full year. >> yeah.

thank you, becky. really it's true. i was sitting here thinking about this. this is the first year in three years where we have seen a relative degree of tabstability around the world. it is what i talked about for 2012 and 2011. the rhetoric has toned down significantly. that's a big change the last two years. i was in europe last week at a huge construction equipment show. the news wasn't doom and gloom. it wasn't all that good but wasn't all that bad stability i think is the word right now. while nobody likes that feeling we're in, certainly it's better than it's been the last couple years. that gives me a little bit better confidence going forward than i have had since 2011, early 2011. >> when you say that, though, you are still bringing numbers

down the full year. not just this quarter but where you see the next three quarter. they will be a little bit weaker than the company was expecting. >> if you look at what's behind that, it's about our mining business. all our construction equipment is a little bit better. our overall backlog, all went up in the first quarter slightly which is a piece of really good news because it has been dropping the last year or so. but our story right now is mining. it's very soft around the world. i'm thinking, hoping we are at the full of mining. if you look at our traditional business, trucks, 100 ton to 400 ton trucks, that's off 50% from its peak. our bucyrus business is about 15%, which is a broader line of mining equipment. thankfully we have that

acquisition. we think we're looking at close to a floor here. and i don't think it can -- it could always get worse. i think we're bumping the the bottom in mining. >> why is that, doug? why do you think you are bumping along the bottom with mining? >> well, a couple of things. they started a year and a half ago. we have seen somewhat of an overhang of their ability to -- the equipment they have, what we have shipped to them. but oil prices are still relatively high. copper is high. it hasn't dropped through the floor. gold has come off. still, $1400 an ounce is still a pretty good price for the long term. that allows minors to reinvest. that's what we are seeing as

well with the future shipments that we have. >> doug, i have a philosophical question for you. you have traditionally prided guidance sometimes as much as five years. in some cases you have missed on over those years. does it make sense to provide guidance long term like that? >> well, sometimes i wonder, brian. because it is so difficult to predict what's happening. today what we've got say monetary policy infused growth rate, as anemic as it is. fiscal policies around the world had been restrictive. that offset is about the only thing going. we are seeing three steps forward, two back with money supply. and then kind of backing up on fiscal. i think we're going to be in that mode for an awfully long time. our problem right now it's hard to predict a flat to slow growth

economy and what happens within the segments we sell to. >> i think you did mention but i want to be specific here. the fact is 20 years ago you were able to predict guidance because you understand about gdp growth around the world. are you saying the distortions are making it difficult to put a forecast out there. because you don't know if it's actually real? is that what you're saying? >> snow, i'm not saying that. in a slow growth environment where world growth is two and a half, more or less to three. u.s. is two and a half, it's hard for us to predict that closely which one of our segments is going to grow. that barely covers any kind of unemployment inflation and process. it's hard to say, given that 2.5% growth, housing is good today. mining is not. if we're going 3% to 5%, it's

easy to predict. it's a function of the growth rate. >> and coal has been in a slide in price for years. it's not sexy. it is a huge business. from earnings recently we have seen a little sniff, just a sniff that perhaps the price of coal is beginning to stabilize. do you see that at all? >> well, i do. coal is another one it's not falling through the floor. there's still great expert growth in the united states. a lot of coal is being burned around the world. there's still a lot of coal burn in this country, albeit less than there was at the peak. as economic growth continues to recovery here and if we could see growth rates in the upper twos, a little bit more than three, we will need coal, oil, gas. that's what's going to happen. while i do not see a spike, i certainly don't see much of a down side.

>> would that end some of the bleeding -- if we even see a stabilization would that end some of the bleeding on the mining side of coal? >> sure, it would. absolutely it would. the coal mines being used today, being mined today, we're still seeing activity. the market is good. it's very anemic and slow. and the results will cut back too in their stockpile amounts. we had two warm winters. lots of technical data behind it. but i really feel like if we see any economic growth it will punch it up a bit. >> we spoke to michael ward of csx. they have been very weak. he was suggesting something like you are. we look at caterpillar and we saw us to approximate what is going on around the globe. i know we started talking about this.

you think that this is the first time you have seen a relative amount of stability around the globe for the first time in the last three years. do you think we have escaped the spring swoon this time? >> maybe we have. i feel better. there are symptoms about a cough every day in some of the economics we read. really the news in europe is behind us. everybody knows how bad it is. this is the first year we haven't had pieces broken down. china news is pretty good. and our numbers are up there, as i mentioned. our inventory both in china and the united states has come down significantly. so in the second quarter we're fairly close to where we want to be with inventory and sales rates. we could expect our production schedules to go up. and the economic news is a very bit brighter. i don't want to be overly

optimistic here, but it certainly feels a little better than the last two springs. going back to '11, i agree that. >> we have been out of the market five years. we have been rebuilding our balance sheet. the balance sheet has to be strong. we did protect our dividend in '08 and '09. we did not have our credit rating cut. we thought with the amount of cash, the strength a bit more optimism and great cash flow numbers and the opportunity to buy stock at a relatively good i think a good level, it's time to do it. >> okay. doug, again, we want to thank you very much this morning. the stock was down when you first announced the results. but it's been trading a little bit higher. 80.80 after 80.43. thank you very much for joining us. >> thank you, becky.

always good to see you all. >> you bet. coming up, the latest from boston as details emerge. we'll be talking to former cia director james woolsy. still to come, will the sequester increase your wait time? hampton pierson will join us on the affects of the faa employee furloughs. right now as we head to break, look at u.s. equity futures. dow looks like it will open 42 points higher.

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welcome back to "squawk box". ebay ceo of e-mailing many. the first messages went out yesterday morning. this move is an unprecedented lobbying effort to change looming federal sales tax legislation. it gives states the power to outside borders to collect sales tax. he said it unfairly burdens

online merchants. he suggests sending a letter to congress. >> and they're slamming amazon as well. they basically say amazon is also with the big box retailers pushing for this legislation. amazon is advocating for the legislation too, while at the same time they are seeking local tax exemptions to build warehouses. you're talking out both sides of your mouth, amazon. >> i expect beck where to be the ultimate expert. where is becky quick on this? >> i think you should get an exemption if you're somebody below a million. >> you should? >> yeah. it shouldn't affect somebody who is doing a small business through some of these things. however, if you look states are getting aggressive. in new jersey, you the shopper are required to figure out how much you are spending all year

long and you're expected to pay it in the taxes yourself. you knew this change was coming. >> retroactively. at the end of taxes you are supposed to pay the retail tax you didn't pavement you are responsible for paying this because they didn't collect it. >> amazon built this into the back end of their system. but with ebay it becomes much more complicated. >> you should have a national system where you take a state-by-state basis. there are thousands of local municipalities charging taxes. that's impossible. >> you don't need sales tax on person-to-person transactions. if you're andrew's house of cheese -- >> if i put up my used ski boots. >> no sales tax. >> currently there is no sales

tax. >> what if you're selling a million dollars worth of cheese or ski boots. >> if i buy it from an individual -- >> how do you determine what's a business and individual? >> that goes to your point at the end of the year. ebay knows that may dissuade people from using ebay. hey, i don't know if i have to pay tax on it or not. >> if you're stick to go that story. >> you can go back and look at my taxes. i do pay. >> scoff law. >> you're a total liar. go back and look at my taxes. >> the irs have already audited me twice in the last 12 years. >> by the end of the show he will have a problem with the faa and the irs. are you sure you want to co-op it going? >> right.

>> sec is next. >> right. >> the suspect in last week's boston marathon bombings now responding thankfully to investigators's questions making a dramatic turn for law enforcement officials definitely trying to piece together what was behind the attack and answer the all important question of why. scott cohn is in boston and the latest on the investigation. scott, it looks like the suspect cannot speak because of a gunshot wound to the neck, which sounds like, according to various reports, was likely self inflicted. >> that's right, brian. we're hearing that most of those responses from dzhokhar tsarnaev are in writing. it could be this morning we see the formal criminal charges. and the fact that they took time to put this complaint together we may get a fair amount of

detail including what deval patrick said is incriminating video at the scene of monday's blast. >> this suspect took the backpack off, put it down, did not react when the first explosion went off. and then moved away from the backpack in time for the second explosion. >> what about the older brother, 26-year-old tamerlan tsarnaev who of course did not survive the manhunt? what about the fact that he was interviewed by the fbi in 2011, went to russia in 2012, and then there was no follow-up? it's bipartisan now on capitol hill. they say this raises some serious questions. >> this man was pointed out by a foreign government to be dangerous. he was interviewed by the fbi once. what did they find out? what did they miss? then he went to russia and chechnya.

why wasn't he interviewed when he came back? >> all of this comes as authorities still process the evidence, including processing the crime scene on boylston street which has not been opened up to traffic. today in boston 2:50 p.m., church bells will ring out and also this morning one of the victims of the blast krystle campbell will be laid to rest. >> thank you for that. for more on the boston bombing investigation, we're joined by former cia director james woolsy. you heard schumer in the tape and he asked the question, do you consider this an intelligence failure? we have lived over a decade since 9/11 without a major situation like this. also we have stopped a number of these things. but when you think about this guy going to russia, coming back, putting up stuff on youtube, the russians calling the government to say is he all

right and no follow-up, how do you think about it? >> well, i think it's a government failure. this wasn't something that the cia oversees. this is not their issue. what happened is that there was no follow-up. and the same thing happened a few years ago with i believe the underwear bomber. his father reported him to the u.s. embassy in nigeria. saying my soon is has become a real radical. you better watch him. it fell on deaf ears. nobody watched him. and it took the crew and the passengers on the plane to keep the plane from being blown up. we don't really have a very good system for staying on top of people who get reported unless they are shown to be violent. once they're violent, then our law enforcement authorities apparently kind of indeed.

they're worried. i think they're scared of being charged with islamaphobia if they stay on top of somebody who happens to be a muslim if there's some reporting. >> so do you think that is an under lying problem, that there's a worry about people considering this profile something to put it in perspective, how many calls a day is the fbi, cia and other officials getting like this? >> i have no idea. >> do you think it's a regular thing? 50 times a year? thousands of times at year? >> it's probably hundreds. but i don't know. and i think there's a worry. it's the first amendment for a reason. it's freedom of speech, religion, press. we don't want to discriminate against people in any way because of their religion. but when an institution gets

going like the the jihadis coming into existence here in recent years, it starts with 9/11, though it was way before that, we have to pay attention to what they're saying to one another and what they're doing. you couldn't stop the burning of witches in salem in the 1690s just by paying attention to the people who were lighting the fires under the poor women being burned. you had to pay attention to everything going on in that society for it to be stopped. >> the mayor said these men acted alone. do you believe that? >> well, it depends on what you mean by alone. certainly they seem to have been inspired by people talking on the web and videos and the like as sort of the ways hassan, workplace violence told his fellow workers he was on jihad

and killed fellow soldiers. they are not even given the people who were wounded at ft. hood the purple heart because they said it was just workplace violence. well, you have to get out of the mode of thinking that everything is workplace violence unless and until there's 100% clarity there were meetings and so forth with people who were guiding them. sometimes people self radicalize in an ideology like islamist jihadism. and it happened. >> thank you for your perspective this morning. we appreciate it. as the investigation continues, i imagine we'll be talking again. >> good to be with you. >> coming up, your guide to the training week ahead. rick santelli in chicago and the sequester effects on travel. furloughs began yesterday. the question, should you be preparing for airport delays? something gary cares about.

a live report after the break.

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welcome back, everybody. hoax of the morning. check out shares of zynga.

a press released claimed that maker of online games was bought by badu. it was a fake. the release was not put out by it. it was on a website called pr urgent. it doesn't charge anything for putting out any press releases. we have seen similar frauds and fakes. stock $3.26. >> it's not a particularly good hoax either. if you're putting out a pr release. this is literally and it's fake news release. given recent setback, zynga needs a question. i'm guessing who needs a question is the person or persons who wrote the press release. they now feel the need to break the law to come back. it's the worst fake i have ever

seen. if you're watching "squawk box", you stink. >> it's 8:30. >> i was done at the sec. they will know who sold zynga stock in 15 minutes. >> this guy probably bought options on friday. the whole thing -- they're going to know if 15 minutes if there was transactions done premarket. >> they maked quotes from badu. they are like we don't know anything about this. >> they said this is not from us. this is a fake. couldn't figure it out by looking at how lousy the press release was. badu said it as well. u.s. economy will officially become 3% bigger in july. they are updating national accounts to take inning r in tanningths into account.

refiction is the equivalent of adding a country the size of belgium to the estimate size of the world's economy. >> the effects of the sequester, hampton pearson joins us with more. >> how are you doing, andrew? this is the first day travelers will feel a full effect of the sequester and the furloughs of faa employees, including air traffic controllers. here at reagan national, we're two-thirds of the way through the morning launch. so far we have had a handful of flights that are an hour late getting off the ground. nationwide the faa and the airlines telling travelers to affect the delays. faa statement reads in part, "the faa will be working with the air leans and using a

comprehensive set of tools to delay the impacts as we move into the busy summer travel season. last night there were reports of a 70-minute delay at jfk on inbound flights. nightmare at laguardia. three-hour delays. some arriving flights due to staffing issues. that according to the faa. depending which set of numbers you look at as far as the contribution to the sequester, they are furloughing 47,000 employees, 15,000 air traffic controllers one day per pay period from now through the end of september. back to you guys. >> hampton, earlier we spoke to mike boyd who said even after the sequester they will have 5% more money than five years ago. while they are dealing with loads down 8%.

has anybody said why the system has gotten so bloated. is there a reason that they need more staff? >> there were other methods they could have used to avoid these sequester impacts. that's an ongoing debate. again, it depends on whose numbers you're looking at and how you get to those numbers in particular. but the bottom line is i remember back in the spring when we were listening to all the agencies give their doomsday scenarios about what the sequester would mean that this was the one we knew would really resonate with the public. if you started talking about more lines, more delays at the airports just as the summer travel season was pick up when

otherwise the airline industry is on a bit of a role, this was going to resonate with the public as far as sequester impacts. >> hampton, thank you. good talking to you. >> did you hear that background music? musak? fantastic. >> maybe they can put candles up there, you know, for the touchy-feely part, andrew. >> reagan has the music. they don't do that at jfk. >> a guy on twitter said i can't verify but he came back from to laguardia and it was slow. and the tsa was saying if you don't like it, write your congressman. can't verify it but i wouldn't put it past them. your list of stocks to watch ahead of the opening bell.

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welcome back to "squawk box" this morning.

we're keeping an eye on caterpillar. 1.31 a share, nine cents below estimates and cut its output for the year. ceo said dealers did not add inventory during the first quarter as they usually do. oil field services halliburton earned 67 cents per share for the first quarter, 10 cents above estimates. when certain items are excluded. it is in talks to resolve legal issues involving -- how do you pronounce that? the well explosion that ended in the gulf oil spill. hasbro earned five cents per share, excluding certain estimates. it grew in three of its four products, categories. and b&e aerospace is benefiting

from a delivery of new aircraft. a check of the markets ahead of the trading week. rick santelli joins us from the cme in chicago. a lot of things happening. yen back towards 100. gold is popping back. what's really caught your attention this morning? i think i want to continue to digest some of what japan is doing and how the rest of the central bankers, economists are going to deal with potentially is one of the key markets to pay attention to. we see italian yields getting closer to 4% in the 10-year maturity. this is all fascinating. funding issues in europe are moderating. the economy in europe has vanished. we're going to have a pretty good advanced look at our first look at first quarter gdp on friday. many believe it will be close to 3%. it certainly doesn't feel like a 3% economy.

so i think it's going to be an interesting week. a lot of housing data. housing may be a little overtalked with regard to the rebound. and we'll get a better sense of reality with existing home sales at 10:00 eastern. >> what's the most important number of the week? >> first quarter gdp friday. >> first quarter gdp, you're right, it doesn't necessarily feel like a 3% economy at this point. is there a number that would shock you, though? a range of 2% to 3%? or 2.5% to 3.2% or something? >> i think the number will be closer to 2.5%. it didn't give traction to the notions of an economy growing less than 1% means. this time around we're going to see many dismiss the strength in the first quarter. and both have to do with political motivations, whether

it was the fiscal cliff last year or the notion of the sequester and the lunacy of agencies that spend boat loads more than just a few years ago, put into sequester mode because our own government decided to punish itself with nuances in spending cuts they never thought would be implemented because they don't think very much about anything in my opinion. >> we have a friend of yours today. gary is back on set with us. >> rick, i have a tear in my eye. i miss chatting with you. it's great to see you. sully asked me a question earlier. if the fed wasn't manipulating interest rates where would the 10-year be? i said it sort of depends which scenario it is. i know if you were here you wouldn't want to jump in at that point. >> i would think 100 basis points higher.

it's difficult to say. the economic outlook is so soft they could have gotten away with a lot less and a lot less iron, a lot less anxiety over the ultimate exit. i don't think they expected this after the crisis we would still be looking at major pockets of slow growth. >> rick, thank you. see you tomorrow. >> good seeing you, gary. coming up, more from boston. more about the bombing at the finish line of the boston marathon. we'll dig on on this topic with him next.

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welcome back. joining us is chad sweet, former cia officer and co-founder and ceo of chertoff group. we have learned a good deal about the brothers over the weekend. not everything, but we have learned a lot. russia identified tamerlan as a potential risk, alerted our fbi. what can we discern from that and what we learned about the suspects from the weekend? >> well, i think a couple points. one is the bureau has batted close to 1,000 for over a decade

since 9/11. we need to remember that. even, you know, a-rod and other top performers in sports strike out. this is where there will be lessons learned. he was clearly identified as a violent islamist extremist. we should have had some type of flag to monitor him when we flied. we may find out he traveled under an alias. especially on the open social media that did not take place. that's going to invite a very important discussion for all of us. >> but we have had on set and in the previous hour on squawks box have had discussions on air and off air about privacy, what the level is between what you're allowed to do and what the government can do to you and

around you. does this change the game at all? this is a guy who purportedly accessed bomb-making web sites on al qaeda linked web sites based in yemen. >> this is the debate me need to have openly. after the christmas day bomber we talked about do we want to deploy the body scanners. we came to the conclusion we did. this is an example where we have to ask ourselves a question should we have the authority of law enforcement to do social media monitoring. when people post on their website, there is no expectation of privacy if they haven't set their privacy setting to prevent that. we will look at big data predictive tools. >> what are we doing right now? on that score, social media, following things that are public. google follows us anyway. what is the government doing

right now? >> right now the government's hands are tied in many ways on the home front. on the away game you can see we have been able to exploit social media in ways extremely effective. if you think about an ied, you have to know how to put it together, put it on site. and the detonation. we want to up that to the left of boom. the way you do it is in part through social media monitoring and loose at savings accounts. we have that ability today. if you think about anticipate virus software, they detect malware and block it. if somebody is looking at known violent islamist extremist sites. the last i will leave you with. the fbi asked repeatedly to modern side the law for the internet. gchat they cannot get in.

we need to enable them to do that. >> how often do foreign governments call up the u.s. and say, you know what, we're worried about so-and-so coming here. >> the russians have an agenda with chechnya. this is certainly something that would be on the radar. it's something that would require the agency and dhs to typically flag that. that is something we're going to have to look at. >> chad, thank you very much. we have much more to come in the days and hours. we will tell you about a new scholarship for study in china intended to rival the scholarship.

"squawk box" will be right back.

welcome back to "squawk box" this morning. you have green arrows across the board on the fair value chart. the dow will open up 22 points

higher and the s&p 500 a little over two points. let's talk about headlines. blackstone head steven schwartzman is creating a studia the university, which it will rival rhodes scholarship. it is one of the largest gifts of education in the world. including bp, it will pay for 200 students every year to attend a one-year masters program in beijing, and i didn't realize this. they put together more money than the rhodes scholarship. the rhodes scholarship has been around for a century and he's basically trying to create the same thing to get westerners overnight to spend some time in china. an interesting thing to see in action. >> it is. >> rhodes didn't have leveraged buyouts. >> by the way, the great line i think it was in the new york times or somewhere else. you saw this? >> why he created it.

when he was in yale in 1969 he couldn't get a rhodes scholarship. >> don't harbor the bitterness. 40 years later he's ticked off still. >> boone pickens because he got cut off the basketball team and that's why osu gets all his money. i'm the same way. >> yeah. >> to do everything that he's done and ultimately he can give some of his money away and not a bad way to do it. >>or guest host and friend, gary kaminsky is back and just like when he was here as cnbc contributor and employee he will somehow get the last word. that's next. i know what you're thinking...

transit fares! as in the 37 billion transit fares we help collect each year. no? oh, right. you're thinking of the 1.6 million daily customer care interactions xerox handles. or the 900 million health insurance claims we process.

so, it's no surprise to you that companies depend on today's xerox for services that simplify how work gets done. which is...pretty much what we've always stood for. with xerox, you're ready for real business. welcome back, everybody. our guest today has been gary kaminsky. he has the last word right now. it's so good to have you on set. nice to have you with us. >> it's great to be with you. i miss everybody. the most interesting thing to me is despite what we've seen in apple stock and some of the other technology name, when they surveyed all of the clients in terms of expectations and the san francisco bay area where there is a lot of organic growth

despite what many of the stock prices may be doing continues to be the most optomistic in terms of the regional areas, i thought that was very interesting. >> that didn't surprise me even though apple and technology have been under so much pressure. it seems to me that people in the bay area have optimism all of the time like the sense of optimism. >> it's an area where organic growth as opposed to industrial cyclical growth, the ebbs and flows of cyclical businesses, organic growth continues to be optimistic. you are less reliant than others. >> i see l.a. is on that list, too, come on. >> well, i don't know. you're trying to get to l.a. you want me to sort of endorse you having the branch -- >> where is new york, for example? >> new york is obviously very correlated to the equity markets business so doing better as a result of what's happening with financial services. >> very quickly, copper. >> we brought it up earlier with the caterpillar